Meta Shares Slip On Cautious Guidance — But Fund Manager Explains Why Facebook Parent's Q3 Was Better Than Tesla's

Meta Platform, Inc.’s META shares rose immediately after the release of the company’s third-quarter results but reversed course after the earnings call. Future Fund Managing Partner Gary Black delved into the potential reasons for the reversal in sentiment.

What Happened: Meta CFO Susan Li’s response to a question on whether the geopolitical situation has impacted Meta’s ad business so far in the fourth quarter took the stock from $308 to $290 in the after-hours trading, Black said.

Li stated that the company observed softer ad spending at the beginning of the fourth quarter, correlating with the start of the conflict, which is captured in the fourth-quarter revenue outlook, the fund manager noted.

The after-hours post-earnings call decline is unwarranted, given Meta’s fourth-quarter revenue guidance of $36.5 billion to $40 billion surrounded the consensus estimate of $38.5 billion, he said.

“Over the coming days we would expect Meta IR to moderate their negative tone as they speak with large investors,” Black said.

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Meta Vs. Tesla – How Q3 Compares: Black attributed the after-hours sell-off in Tesla, Inc. TSLA shares to comments from Li on Meta’s earnings call that the fourth quarter and 2024 revenue would be highly dependent on macro factors.

Tesla CEO Elon Musk’s cribbing about macro factors was one of the factors that triggered a sell-off in the electric vehicle maker’s shares following its quarterly results.

Black, however, rated Meta’s results as better than Tesla’s. He noted that Tesla missed on third-quarter gross margins and earnings, while Meta reported a third-quarter beat.

Also, Musk signaled more price cuts could come in the fourth quarter, which suggests further margin erosion and potentially another earnings miss, the fund manager said. On the other hand, Meta guided to in-line fourth-quarter results, he added.

Tesla ended Wednesday’s session down 1.89% to $212.42 and lost an incremental 2.21% to $207.73 in after-hours session, according to Benzinga Pro data. Meta, which closed the regular session down 4.17% at $299.53, fell 3.35% to $289.50 in extended trading.

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